The
current economic environment remains tough: our year-over-year revenues
decreased 8%. However, our continued
focus on aspects of the business below the revenue line is paying off. Gross margin was 20.1% in the quarter and,
even adjusting for some non-recurring items, it was 19.1%, still an all-time
high for us. Similarly, contribution
percentage was higher than ever due to better margins and a controlled
marketing spend. We are making prudent
long-term investments in the business in talent and capital expenditures,
throttled by internally generated cash flows, thus ensuring we do not get out
in front of our headlights.

I
look forward to speaking with you on our upcoming conference call, and until
then, I remain,

Total
revenue  Total revenue for the three months ended March 31, 2009 and 2008
was $187.4 million and $202.8 million, respectively, an 8% decrease.

Gross
profit  Gross profit for the three months ended March 31, 2009 and 2008
was $37.7 million and $34.0 million, respectively, an 11% increase,
representing 20.1% and 16.7% as a percentage of total revenue for those
respective periods.

In
Q1 2009, we reduced total cost of goods sold by $1.9 million for
recoveries from partners who were underbilled in 2008 for certain fees and
charges that they were contractually obligated to pay and a refund due of
overbillings by a freight carrier for charges from Q4 2008. This accounted for
103 basis points of the 337 basis point improvement from Q1 2008. Without this reduction, gross profit for the
three months ended March 31, 2009 would be $35.8 million (19.1% as a
percentage of total revenue), a 5% increase from Q1 2008.

Contribution
(a non-GAAP measure) and contribution margin  Contribution (gross profit
less sales and marketing expenses) for the three months ended March 31,
2009 and 2008 was $24.2 million (12.9% contribution margin) and $19.0 million
(9.3% contribution margin), respectively, a 27% increase, or a 355 basis point
improvement.

Three months ended
March 31,

(amounts in thousands)

2008

2009

Total revenue

$

202,814

$

187,367

Cost of goods sold

168,843

149,676

Gross profit

33,971

37,691

Less: Sales and marketing expense

15,019

13,540

Contribution

$

18,952

$

24,151

Contribution margin

9.3

%

12.9

%

Without
the adjustment to cost of goods sold described above, contribution for Q1 2009
would have been $22.3 million (11.9% contribution margin), a 17% increase.

Contribution
reflects an additional way of viewing our results. When viewed with our GAAP gross profit less
sales and marketing expenses, we believe contribution provides investors
information about the performance of the companys sales and marketing efforts
in generating gross profit.

2

General
and administrative (G&A) expenses  G&A expenses totaled $13.5
million and $9.6 million for the three months ended March 31, 2009
and 2008, respectively, approximately 7.2% and 4.7% of total revenue for those
respective periods. The increase of $3.9
million in Q1 G&A expenses year over year is primarily due to an increase
in merchandising, finance, human resources, and other administrative
staff. It also reflects an increase in
facilities expenses and a one-time termination payment of $1.25 million accrued
in connection with the termination of a consulting arrangement with Icent LLC. We have paid the termination payment to Icent
LLCs chief executive officer James V. Joyce, who resigned from his position as
a member of the Companys Board of Directors on April 1, 2009.

The
increase in G&A expenses was partially offset as we recognized a reduction
of legal expense related to $600,000 of a $2.75 million payment that we
received from an insurer in settlement of a dispute regarding insurance
coverage of a legal matter.

Operating
loss  Operating loss for the three months ended March 31, 2009 was $(3.1)
million compared to $(5.1) million for the three months ended March 31,
2008, a $2.0 million improvement.

Other income (expense)  For the three
months ended March 31, 2009, other income (expense) was $1.7 million. This
included a $1.9 million gain, net of amortization of debt discount of
$63,000 on the extinguishment of $4.9 million of our 3.75% Convertible
Senior Notes. This gain was offset in
part by a loss on the disposition of fixed assets of $184,000.

Net
loss  Net loss for the three months ended March 31, 2009 was $(2.1)
million, or $(0.09) loss per common share, compared to $(4.7) million, or
$(0.20) per common share in 2008.

Adjusted
EBITDA  Adjusted EBITDA (a non-GAAP measure) for the three months ended March 31,
2009 and 2008 was $2.0 million and $2.7 million, respectively. For the twelve
months ended March 31, 2009 and 2008, Adjusted EBITDA was $14.3 million
and $1.1 million, respectively. Adjusted
EBITDA, which we reconcile to Net income (loss) below, is an additional way
of viewing our results that, when viewed together with our GAAP results,
provides a more complete understanding of factors affecting our results. We believe that discussing Adjusted EBITDA is
useful to us and investors because it approximates actual cash used or cash
generated by the continuing operations of the business.

Our
calculation of Adjusted EBITDA is set forth below:

3

Three months ended

Twelve months ended

March 31,

March 31,

(in thousands)

2008

2009

2008

2009

Net loss

$

(4,724

)

$

(2,099

)

$

(30,672

)

$

(10,033

)

Add back amounts for computation of Adjusted EBITDA:

Depreciation and amortization, including internal-use software and
website development, and other amortization

6,497

4,185

28,221

20,355

Stock-based compensation expense to employees and directors

1,184

849

4,633

3,687

Stock-based compensation to consultants for services

(14

)

10

170

283

Stock-based compensation related to performance share plan

150



(400

)

(1,150

)

Treasury stock issued from treasury for 401(k) matching contribution

19



(89

)



Interest (income) expense, net

(403

)

743

(1,042

)

1,445

Other (income), net



(1,736

)

(290

)

Loss from discontinued operations





300



Adjusted EBITDA

$

2,709

$

1,952

$

1,121

$

14,297

Free Cash Flow (a non-GAAP measure)  Free cash flow
for the three months ended March 31, 2009 and 2008 totaled $(28.8) million
and $(42.4) million, respectively. For
the twelve months ended March 31, 2009 and 2008, free cash flow was $(3.2)
million and $23.7 million.

Free
cash flow reflects an additional way of viewing our cash flows and liquidity
that, when viewed with our GAAP results, provides a more complete understanding
of factors and trends affecting our cash flows. Free cash flow, which we
reconcile to Net cash provided by
(used in) operating activities, is cash flow from operations reduced by
Expenditures for fixed assets,
including internal-use software and website development. Although we
believe that cash flow from operating activities is an important measure, we
believe free cash flow is a useful measure to evaluate our business since
purchases of fixed assets are a necessary component of ongoing operations. Therefore, we believe it is important to view
free cash flow as a complement to our entire consolidated statements of cash
flows.

Three months ended
March 31,

Twelve months ended
March 31,

(in thousands)

2008

2009

2008

2009

Net cash provided by (used in) operating activities

$

(41,044

)

$

(27,083

)

$

27,173

$

15,921

Expenditures for fixed assets, including internal-use software and
website development

(1,313

)

(1,736

)

(3,479

)

(19,113

)

Free cash flow

$

(42,357

)

$

(28,819

)

$

23,694

$

(3,192

)

Cash and working capital
 At March 31, 2009, Overstock.com had cash and cash equivalents of $78.6
million. Working capital was $33.7
million and $39.7 million at March 31, 2009 and December 31, 2008,
respectively.

4

About Overstock.com

Overstock.com, Inc. is an online retailer offering brand-name merchandise at discount prices. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory distribution channel. Overstock.com, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com. Overstock.com regularly posts information about the company and other related matters on its website under the heading Investor Relations.

# # #

Overstock.com® is a
registered trademark of Overstock.com, Inc. All other trademarks are the property of
their respective owners.

This press release contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements include all statements other than
statements of historical facts. Our Form 10-K/A for the year ended December 31,
2008, and our other subsequent filings with the Securities and Exchange
Commission identify important factors that could cause our actual results to
differ materially from those contained in our projections, estimates or
forward-looking statements.